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Sample of collection letter in business

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Sample of collection letter in business
September 16, 2019 Wedding Anniversary Wishes 4 comments

A collection letter is a formal notification that informs customers of a late and consumer debts and can be addressed to both individuals and business debtors. triochitarristicodiroma.com letters.

Is sending collection letters a challenge in your small business? You're not alone. Many business owners don’t know how to write a collection letter or have a sample they can use as a reference.

Collection letters should do two things: 1) retain customer good will and 2) help you get paid. You know a letter is working when you send out a batch of letters and your phone rings off the hook or payments start arriving in the mail. If you send out a batch of letters and there is no response, it’s time for a new collection letter template.

In order to understand the best practices of letter creation, a sample collection letter is available below. 

An Example of When to Use a Collection Letter

Sales just haven’t been what they were last year at this time. Frank shook his head as he looked over the aged trial balance print out, he knew he faced an uncomfortable job that was now a necessity if he wanted to stay in business.

With the collection of letters written by an expert guiding him he knew just what to do. “Send earlier rather than later,” the expert had commanded. Frank took his pile of past due invoices and started inputting customer information into the collection letter templates. As Frank worked his way through the pile, his confidence grew with the thought of getting paid this money that was owed to him.

Sample Collection Letter

Franks Plumbing
123 Main Street
Anywhere, NH 05000

Account# or Invoice #:123
Balance due or Past Due Balance: $100.00

This is a reminder that your account balance of $100.00 was overdue as of November 28, 2008.

Please pay this amount today, I have enclosed a stamped payment envelope for your convenience.

Thank you for your payment.

Frank Smith
Franks Plumbing

As you can see from the sample collection letter above, the most effective collection letters are short, to the point and easy to read. Try to avoid long or confusing words and sentences. The more direct letter leads to fewer misunderstandings.

Collection Letter Tips

Your collection letter should:

  • Tell the reason for your letter in the first sentence
  • Explain more about the first sentence in your second sentence
  • Suggest a solution
  • Thank the recipient

Your collection letter is a reflection of your business, so keep it professional and be sure to sign each letter personally. Remember that your letter is to persuade someone to send you money. Your wording and tone are critical, especially if this is a customer you want to continue to do business with. Always assume the customer will pay.

Enclosing an envelope for payment is also a good idea. If you can include postage on the payment envelope, that is better. The easier you make it for the customer to make the payment, the better your chances are of getting paid.

Michelle Dunn helps companies that want to have customers that pay on time or early, she works with companies that are struggling with customers that pay late or don’t pay. Michelle has over 21 years experience in credit & debt collection, is the author of “Become the Squeaky Wheel, a credit & collections guide for everyone” and many other books and possesses a depth of knowledge and a whole tool kit of products and services that can make a big difference for your company.

In business, we deal with financial transactions on the daily basis. Also, a bank or any firm or a supplier write a collection letter to a person regarding repayment of loans. All these come under Solved Example for You. Problem: Categorize.

11+ Collection Letter Templates – Google Docs, MS Word, Apple Pages

sample of collection letter in business

A collection letter is a letter that a business will send to another business or a customer when there is an unpaid account or payments for an invoice are overdue. The point of the letter is to remind the debtor that their payments are late and give them an opportunity to settle the debt before more serious steps are taken.

If the first letter is unsuccessful, several collection letters may be sent before any legal action is taken.

When a collection agency is involved, the collection letter will be issued from the agency instead of being sent directly from the organization that is seeking compensation.

Read below to learn how to write a collection letter and download a free copy of our collection letter template.

Collection Letter Sample:


Dear [Mr./Mrs. Last Name],

We are sending this letter as a reminder that your account payments are overdue in the amount of $[XX]. The invoice in question was due on (MM/DD/YY) and is currently [X] days overdue. The specifics of this invoice are listed below for your convenience:

Invoice Number:




We understand that your failure to pay may be an oversight. Please make your payment no later than (MM/DD/YY) to avoid any penalty fees.

We accept checks, credit and debits cards and direct deposit payments. If you have any questions about how to make your payment, please call use at [phone number] or send us an email at [email address].

In the event that you are unable to pay by (MM/DD/YY), please call us at [phone number] so that we can determine a payment plan.

Thank you in advance for your response.




[Business name]

How to Write a Collection Letter:

1. Include all of the relevant details.

If you are in the position of having to write a collection letter, you need to include all of the details that are relevant to the party receiving the letter. This includes the exact sum of money owed, description of the service or goods provided at the time the transaction took place, what the original payment agreement was, etc. In other words, it needs to be abundantly clear that you upheld your end of the deal but the debtor failed to pay on time.

2. Be professional and courteous.

Do not include any emotional language or threatening phrases in your letter. The debtor is probably a customer whose business you would value in the future, so try to maintain a professional tone throughout the letter. If this is the first letter you have had to send, be extra cautious. For all you know, the missed payment could genuinely be a mistake.

3. Explain what the next steps are.

Tell the recipient of the letter what happens next, whether that means they have two weeks to pay without penalty, or whether it means you will send two more letters and begin to charge interest on their debt. Adding deadlines will help to make the situation more urgent and give the debtor an incentive to resolve the issue quickly.

4. Always keep copies of the letters and any response you receive.

Documenting your communication with the company or individual that owes you money could be important if they refuse or are unable to pay. In the unfortunate event that you need to take legal action, you can refer back to these letters and use them as evidence that you did everything you could to notify the debtor and resolve the issue.

Final Thoughts:

No one wants to be in the unfortunate position of having to send out a collection letter, but doing it the right way could help you to recover money that is owed to your business for good or services that you have already rendered.

While collection letters aren't always effective, in some cases they can solve your accounts receivable problems and help your business to get more cash flow.


What should I write in a collection letter?

The amount of money owed, description of the service or goods provided, and the original payment agreement. Explain what their next steps are to pay the debt, and give dates for any additional penalties they will incur.

Learn more about how to write a collection letter.

How do I write a collection letter?

  • Ensure that it is clear and simple.
  • Use a company letterhead.
  • Enclose copies of the relevant statements/invoices.
  • Type the letter instead of a handwritten one.
  • Highlight acceptable payment options for the debtor.
  • Specify the final date that the account needs to be settled by.
  • Add your business contact details.
  • Include a postage-paid envelop if the debtor wishes to post a check.

Get a collection letter sample to make it easier.

How can collections be effective?

  • Include dates, dollar amounts, and other relevant information.
  • Be professional and courteous.
  • Explain the next steps and how you can be contacted.
  • Document all letters that are sent or received.

Learn how to write a collection letter.

Can I use a sample letter for collection of payment?

You can use one of our sample collection letters if you need to send a letter to one of your customers. Just customize the blank portions with the appropriate information and include any other information that you would like to convey.

Get a collection letter sample to make it easier.

How many collection letters should I send before taking legal action?

It is typical for businesses and collection agencies to send three letters before taking more serious steps. Usually, each letter is more serious than the last one. The final letter makes it very clear that the debtor is being notified of their last chance to pay the debt without facing legal consequences.

Learn how to write a collection letter.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act (FDCPA) is a federal law that restricts the activity of third-party debt collectors. The legislation limits the ways and times a collection agency can contact a debtor. Under the Fair Debt Collection Practices Act, a demand letter can still be used.

Collection Letter Sample

Download a free Collection Letter Sample in Microsoft Word Format.

Download SampleInstant download. No email required.

Final Collection Letter Template

Download our free Final Collection Letter template.

Download TemplateInstant download. No email required.

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The content of any business collection letter usually states the nature of the complaint and the steps that the recipient needs to take to resolve it. For example, a.

Collection letter

sample of collection letter in business

Table of contents

A collection letter (also known as dunning letter) is a notification sent in writing, informing a consumer of his past due payments. Debtcollection letters’ function is to remind the debtor of his delinquent payment owed to a creditor. As sometimes delayed payments can derive from the reason that the same payments have been forgotten, a debt recovery letter is an appropriate method for early debt recovery, as it is cost effective and can produce positive results of default collection. Usually recovery letters are to be issued consecutively, consisting of 2-5 serial written reminders. The number of default collection letters depend on creditor’s or DCA’s (Debt Collection Agency’s) policy of recovery procedures. A collection letter is to be sent, when debtor’s invoice has become past-due. Financially, this means that the consumer has fallen behind with his regular payments and owes a certain amount to the lender.

General characteristics of collection letters

Each collection letter has to consist of the name of the original creditor and his company, the name of the debt collection agency (if any), representing the lender; the full debt amount; additional costs and fees (if any). If the default collection document is a final one (of demand) or letter before action, it will also consist of a last deadline for payment, after which the debtor’s case will be filed to court and small claims court procedures will follow.

Debt recovery letters are usually dispatched to the debtor by the original creditor or by a private third party organisation, widely known as a debt recovery agency (DRA). Such documents can also be sent by a debt buyer after the purchase of default profiles from the lender. When the debt buying process is completed, the debt purchaser becomes the official owner of the same delinquent accounts and has the legal right to prosecute fair debt recovery, including forwarding a recovery letter by post to the subject of debt. A debt collection letter can be sent by a debt recovery solicitor, as well. Debt lawyers are either part of a debt recovery agency, or act as private entities.

As debt collection agencies (DCAs) are regulated by different laws, so are the debt collection documents & letters. There are restrictions for such letters and their content is confined to several rules, generalising what a debt agent can include in a collection letter. In U.S. the tenor of debt text documents is in compliance with the FDCPA- Fair Debt Collection Practices Act. In UK debt recovery letters’ content is controlled by the Financial Conduct Authority, the Office of Fair Trading, the Late Payment Act Legislation, the Late Payment of Commercial Debts Regulations (for corporate defaults), etc.

Types of collection letters

Debt collection letters are divided into general reminders, inquiry letters, and official collections letters. The official ones consist of demand letters (also known as appeal letters) and warning letters (before action). The standard reminders represent letters with friendly tone, notifying the consumer of his past-due payments. If the debtor settles these amounts on time, the collection process is ceased. If not, the recovery proceedings will continue, using letters of demand and letters before action. During the process of sending the written documents, the tone becomes stricter after each recovery letter.

Late payment demand letters consist of a specific date, marked as a deadline for settling the debt monetary amount. Demand letters represent a formal notice to the person in debt (consumer) and indicates debtor’s legal obligation to clear the debt amount in full. Last collection letters before action (LBA) represent another variety of debt collection documents & letters. They can apply for both commercial and consumer debts and can be addressed to both individuals and business debtors. Such letters are the last resort before proceeding to court actions. They are also known as legal threat collections letters, which warn the indebted subject about future court actions. If the debt is not settled until the date specified in the letter, another letter will follow, informing the debtor that the debt matter issue has been handed over to legal representatives and court proceedings have begun.

If requested by the subject of debt, the debt recovery agency is obliged to send the debtor a debt validation collection letter. Debt validation is a written and official verification, which confirms the size and type of debt, also proving information that such debt exists and has to be paid to a certain first-party (creditor) marked in the default collection document.

A collections letter of settlement is another kind of debt recovery letters graph. Such letters comprise all types of written negotiation sent to the debtor. Debt settlement documents offer the subject of debt more convenient payment plans. The debt can either be paid at once, using one single but smaller payment that the original debt amount; or the subject of debt can chose the option of monthly transactions to the creditor/DCA equal to the full monetary debt sum.

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